Gooch & Housego PLC - Acquisition
February 08 1999 - 7:06AM
UK Regulatory
RNS No 2858b
GOOCH & HOUSEGO PLC
8th February 1999
Gooch & Housego PLC
Acquisition of Cleveland Crystals Inc.
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Introduction
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On Thursday 4th February 1999 Gooch & Housego PLC ("Gooch & Housego"),
purchased all of the common stock of Cleveland Crystals Incorporated
("Cleveland Crystals"), of Cleveland, Ohio for a total consideration of
approximately $6.5m ("the Acquisition").
During the year to 30th June 1998 Cleveland Crystals made a profit before
tax of $764,000 on sales of $5,708,000. The net assets of the business on
that date were $1,603,000.
The Acquisition is being funded in part by a loan of #3.3m from the National
Westminster Bank with the balance coming from reserves.
Dr Eugene Arthurs will continue as President and CEO of Cleveland
Crystals. Since joining the company 18 months ago Dr Arthurs leadership has
been an important factor in the success of the business. The board of Gooch
& Housego are pleased to have him as a member of the team.
Information on Cleveland Crystals
---------------------------------
Cleveland Crystals manufacturers high quality optical crystals and
electro-optic devices. Their principal products are: -
- Very large crystals for use in laser induced nuclear fusion research,
- Electro-optic Q-switches, otherwise known as Pockels cells, which
are used in industrial and scientific lasers to generate high power
optical pulses,
- A wide range of specialist crystals whose optical and electro-optic
properties are critical to the operation of, for example, tunable lasers
and optical detectors.
Cleveland Crystals are widely regarded as the leader in each of these fields.
As an example, Cleveland Crystals' large aperture (40cm) potassium
dihydrogen phosphate (KDP) crystal plates will be used in the world's
largest laser, which is currently under construction as part of a $1.2bn
project. In order to enable Cleveland Crystals to supply the volume of
crystals needed, $5.6m is being invested by the US government in
state-of-the-art equipment to be located in a new finishing facility under
construction at the larger of Cleveland Crystals' two sites. The first
$4.9m order for crystals for this project is expected within weeks and
further substantial orders are expected to follow this year. Over the next
5-7 years this and related projects will probably be the world's largest
consumers of large optics, crystals and Q-switches and will be a very
important customers of both Cleveland Crystals and Gooch & Housego's UK
operation. The acquisition of Cleveland Crystals will not only increase Gooch
& Housego's profile, it will enable the company to become a 'strategic
partner', providing several critical components of the final system.
The Pockels cells or electro-optic Q-switches, which account for
approximately 50% of turnover, perform the same function in a laser as Gooch
& Housego's acousto-optic Q-switches. (A Q-switch is a device used to boost
the output power of a laser by around 1000 times, thus making it a useful
industrial, medical or scientific tool.) The two technologies complement,
rather than compete with, each other and will allow the Gooch & Housego group
to address the full spectrum of Q-switch applications. Both companies are
world leaders in their respective fields. Benefits will result from bringing
together these capabilities, particularly in sales and marketing where a
number of customers are common to both companies.
Cleveland Crystals are experts in the growth of many types of crystals and
utilise a variety of growth techniques. These crystals are 'designed' to
have specific properties, which are exploited for a diverse range of
applications from military counter measures to tunable lasers.
Applications for such lasers include spectroscopy, remote sensing,
medicine, materials processing and laser radar.
Reasons for the Acquisition
---------------------------
In summary, the Acquisition of Cleveland Crystals is strategically important
to Gooch & Housego in three ways: -
1. Cleveland Crystal's business in crystals for laser applications fits in
with Gooch & Housego's planned expansion into the US market for large
aperture crystal and glass optics. (G&H will start manufacturing
optics in Orlando, Florida at the Optronic Laboratories Inc plant this
year.)
2. The range of electro-optic Q-switches manufactured by Cleveland Crystals
is complementary to G&H's range of acousto-optic Q-switches and will
reinforce dominance of this market.
3. Access to a supply of world class crystals of many types will allow G&H
to extend its activities into devices based on non-linear optics,
electro-optics and other technologies previously not easily accessible
due to material supply issues. It will also potentially allow G&H to
become self-sufficient in crystals for its acousto-optic products.
The significant sales of large KDP crystals expected over the next several
years combined with the injection of state-of-the-art equipment and
technology will be drive considerable growth in the business, further
elevating it beyond the level of its few competitors. Extending the
company's activities into related technologies on the back of this growth
will ensure continued long-term development of the business.
Gooch & Housego was advised by PriceWaterhouseCoopers Corporate Finance, and
was represented in the UK by Burges Salmon solicitors and in the USA by
Thompson, Hine & Flory LLP.
Enquiries:
----------
Gooch & Housego
Archie Gooch / Gareth Jones 01460 52271
Buchanan Communications
Tim Thompson 0171 466 5000
Sutherlands Limited
Paul Newman 0171 826 4411
END
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